Sec 40A(3)

i think in amndment FA 2008 only d payment in one time has been amended with payment (either single) or (if more than one payment of same expenditure) aggregates of payment  in a same day. & whole d provision is same as it was. hence if earlier exp was allowed on basis of single bill then now it also should be on d basis of single bill

& in income tax intention of law maker is totally irrelevant otherwise that amendment was not required to be inserted

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EXPENDITURE SHALL BE DISALLOWED ONLY IF EXPENDITURE AS WELL AS ONE TIME PAYMENT BOTH EXCEEDS RS. 20000.

Gentle man

after the amendment effected from 1.4.2009 the old provisions are not relevant for us unless there is a case for the old years.

ACCORDING TO JUDICIAL OPINION, THE WORDS USED ARE IN SUM, i.e, SINGLE SUM.THEREFORE, IRRESPECTIVE OF ANY NUMBER OF TRANSACTIONS, WHERE THE AMOUNT DOES NOT EXCEEDS THE PRESCRIBED AMOUNT IN EACH TRANSACTION, THE RIGOUR OF SECTION 40A(3) WILL NOT APPLY  

Dear All,

This amendment has been made applicable with effect from 1^stApril, 2009 and shall accordingly apply for assessment year 2009-10 and subsequent assessment years.

 /experts/experts_message_display.asp?group_id=183766

Here the i guess expert says the disall is for the person and not payments..please refer this expert opinion..I know the payments being for different heads of exp is not mentioned here..But i guess if  its allowed then the very reason why this sec stays and was amended will be defeated as many have said here...



And i am very eagerly waiting for some recent case laws in this respect

Dear Hareesh,

Sec 40A(3) if

• assesse incurs any expenditure
• in respect of which payment or aggregate of payments made
• to a person
• in a single day
• of a sum exceeding Rs. 20,000
• otherwise than by an account payee cheque or account payee bank draft.

Here expenditure for which payment is made refers to the expenditure against single bill and NOT multiple bills.

To illustrate with example :

Bill No. 1 - Rs15,000

Bill No. 1 - Rs15,000

Bill No. 1 - Rs18,000

Cash of Rs. 48,000 is paid on single day.

Ans :  Sec 40A(3) is not attracted.

For applicability of Sec 40A(3) expenditure as well as payment should exceed Rs. 20,000.

Tushar sir

what about the expert opinion i just posted there???and for the same example u gave i get an ans that its disallowed in my IPCC/PCC TN Manoharans book...

Then one more thing sir...If so every1 will end up splitting the bills right for getting the deduction..I was informed that the new amendment was to plug that loop hole which replaced the single bill concept by aggregate payments to single party

 https://www.taxguru.in/income-tax/income-tax-payment-of-more-than-rs-20000-amendement-in-rule-6d-of-the-income-tax-rules.html

Hareesh,

teh amendment plugged the loophole for making payments at different point of time on a single day by substituting the words aggregate of payments made in a single day. You rightly said people can split there bills but NOT payments. Read memorandum of amendment carefully tht clearly specifies that focus of amendment was entirely on plugging splitting up of payments.

Ok sir...so what about the post i just gave you and example??is that wrong?its exactly as u gave it sir...i hope u went through that

 And sir is it because the bills are on different heads of expenditure ur sayin its allowed...If so be particular as to that too sir..Or is it just because of the fact that they are two mere bills where each is less than 20k

No frnd but have gone thru a reserach during my earlier daz n have also read the memorandum...

hvn't yet had a lukd at your link but surely will hv it.